SPOOKED KERKORIAN DUMPING FORD MOTOR COMPANY STOCK?

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Has Detroit gone crazy?

The current liquidity crisis and the subprime mortage debacle at the root of the housing bust have started to drive some crazed survival moves among the Detroit 3 and their battered investors.

General Motors and Chrysler talking about a merger?

Apparently so.

Ford talking about selling all or part of Mazda?

No comment.

(Selling Mazda would be a curious move given Ford's reliance of Mazda for small car engineering. Obviously, given the hegemony of Asian automakers in the minds of the consumers, an alliance with a Japanese automaker is crucial. Moreover Mazda's motorsports involvement makes it a good fit with Ford. Still Ford may be in such dire straits as to require more "parting out" to survive)

And now Kirk Kerkorian is apparently dumping his six-percent stake in Ford Motor Company

With FoMoCo stock trading at LESS than a gallon of gasoline, the radical environmentalists on the brink of obtaining complete control of the U.S. government, and the prospect that Ford could be the "odd man out" in the apparent consolidation of what's left of the American domestic auto industry, Kerkorian's Tracinda Corporation apparently has decided to cut their huge loses and bail out (at least partially) on Ford.

Is this just the jitters, or does Kerkorian know something that we don't know.

If Ford survives without filing bankruptcy (which might be a EXCURSION-SIZED "IF"), the depressed price of FoMoCo stock might just be the buying opportunity of the decade. But if Ford struggles without a profitable new mix of models (i.e. the Mullaly's Euro Focus/Fiesta plan flops), then the ride for Ford shareholders may be a rough as a Model T on the Rubacon trail.

Hang on tight, Ford shareholders.

WHAT COULD GM WANT WITH CHRYSLER?

1. Market share: GM-Chrysler would instantly control 1/3 of the U.S. market, which would temporarily boost GM morale.

2. Money: Chrysler's holding about $11 Billion according to some reports. That would let GM hang on for as much as another year under the current cash "burn rate"

3. Muscle: GM-Chrysler would probably be "too big to fail." GM would have a lot more leverage in Congress for a bigger bail out package, should it be necessary. If GM-Chrysler fell, it could adversly impact the banking system.

4. Models: While GM and Chrysler have huge product overlap, a merger with Chrysler would give GM the still-valuable Jeep franchise and access to a few already-developed and on-sale platforms, such as Chrysler's minivans. Models on the bubble would be Chrysler's CUVs, RWD Sedans and the Challenger. Models that would most certainly die would be Viper, PT Cruiser, a fair share of Chrysler's non-Jeep SUV lineup, and Chrysler's underperforming FWD midsize cars. Merging with Chrysler does not really help out GM in the small car front in the short term. A big question is whether GM would keep the new coil-rear spring Dodge Ram (or even the Dodge brand).

A merger would highlight the knocks on GM -- too many dealers, too many models, too little focus. However, GM could pick up some market share, cash flow and models for cheap, while reducing some of the administrative overhead of both companies.

It's not a good time to be a middle manager in Detroit, though.

Kerkorian and GM: Crazy? Or Crazy like foxes?